You’d Better Assess Your Needs First
Before we can tackle the subject of life insurance, some basic working knowledge about the business of insurance is necessary so that you will have a better understanding of exactly what to expect in case you are seriously contemplating on taking out an insurance policy.
The business of insurance is one of risk management. As such, the insurance company undertakes to compensate the insured against a contingent risk in exchange for the payment of specific sum in whole or in stated installments called a premium.
The question is: do you need an insurance policy? Although the answer will vary greatly depending on your own financial status and particular circumstances, the general answer is yes. Yes, you do need a life insurance policy because death is a contingent risk that is certain to happen but at an unspecified time.
There are two main types of life insurance policies, these are: term life insurance and whole life insurance. The definition of whole life insurance is that it is a type of life insurance policy that is effective upon the entire life of the insured. This is different from a term life insurance policy which is only effective for a set period of time. Of course, there are some whole life insurance pros and cons and you should definitely gain a better awareness of these specific advantages and disadvantages before you make your final decision.
One of the most important things that you should be aware of in case of a life insurance policy is that it can generally be only collected upon in case of the happening of the contingent risk – upon the death of the insured. There are, however, some exceptions and this is mostly in the case of a term life insurance policy. In a term life insurance policy there may be a money growth plan alongside the policy which the insured can collect on upon the maturity of the term in the contract of life insurance.